Horizon Technology Finance: 8.46% Yield You Cannot Miss (NASDAQ:HRZN)

Investment thesis

Horizon Technology Finance (NASDAQ:HRZN) has an attractive dividend yield combined with monthly stability and security of payments. It invests in sectors and in companies that are in the growth stage in growth sectors. The management could slowly but steadily grow the net interest income in the past 5 years. I believe HRZN is a bit neglected BDC but a good company with stable fundamentals. However, investors should be aware that HRZN is trading above its NAV per share by more than 20% which makes it a bit more speculative buy.

Business Model

Horizon Technology is a business development company specializing in lending and investing in development-stage investments. HRZN is not a typical BDC because it focuses on growth-oriented loans for companies seeking venture capital investments. HRZN provides structured debt products to life science and technology companies. Since 2004, Horizon has directly originated and invested more than $2.3 billion in venture loans to more than 285 growing companies. Its portfolio is geographically diversified but by industry, the main focus is on technology and life science companies. These two sectors are growing significantly with projections that the tech sector will grow by 6.7% in 2022 alone. The life sciences sector broke records in Q4 2021 in private equity and venture capital investments. Over 800 companies received a total of almost $23 billion worth of investments. This…